The purveyors of smart contracts slowly bleed out

By Leo Zhang

Aug 8, 2018

The narrative about smart contracts has existed since Nick Szabo wrote his essays in the 1990s. But in the first half of 2016, financial institutions' margins were thinning, and the industry felt pressure to cut down back office expenses. Mysterious blockchain-based contracts became a meme all over Wall Street. Various blockchain consortia were created. The Ethereum Enterprise Alliance and the ICO phenomenon pushed the hype to its peak. A year later, as the tide goes out, the critical flaws of these systems are gradually being exposed. The article below enumerates these flaws.

Technical Updates

"Basically, it is done to ensure that the miners are putting some money/resources (mining machines) to do the work, which shows that they won’t harm the blockchain system, cause harming the system will result in losing their investment; thus harming themselves."

"Lightning Network adopts an off-chain approach using payment channels and smart contracts. A multi-signature wallet is setup, which is where the bitcoin is held. The funds sent to the multi-party wallet address are confirmed on the Bitcoin blockchain, which anchors the payment channel. Once set up, any two parties can conduct and sign transactions on smart contracts to keep track of the amount of bitcoin each user holds."

News & Commentary

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"The new facility will be located within a section of the former Alcoa Rockdale Operations site. Construction and set-up is underway, and Bitmain estimates this phase will finish early in the fourth quarter of 2018, with the data center initiation in early 2019. The company anticipates that the new facility will bring in 400 local jobs to the local economy over the first two years."

"Given the current state of digital affairs, in which the collection and exploitation of personal data is dominated by big tech firms, Ms Morone’s approach, in which individuals offer their data for sale, seems unlikely to catch on. But what if people really controlled their data—and the tech giants were required to pay for access? What would such a data economy look like?"